Future Proofing Businesses

We had the pleasure of welcoming Justin Lokitz from Business Models Inc. In his talk, Justin details the importance of design thinking methods to make businesses more sustainable and resilient to continually changing industries.

“Business as usual is dead”

We see industries die everyday and Justin argues that this is because companies are not changing their business model to be future proof. As the world changes, there is a lot of uncertainty about which business strategies will succeed, which is why companies rely on the customer data that they have to make business plans. Justin believes that while this way is not wrong, it doesn’t help us create anything new, which is essential for a business. This is why design thinking is popular, because it drives innovation.

Why do we need design now?

One reason is that the global center of gravity is shifting from west to east, meaning that we are starting to look to countries with large populations where industries are getting created and destroyed at a fast pace. These acts as test beds so that we can learn from their mistakes to inform our own design. Another reason why design matters is because customers are getting more empowered by the day and it is important to understand their behavior to inform business models. For example, the automotive industry has huge cost of manufacturing and works with dealership for sales. However, customers are moving more towards a renting culture where they don’t want to buy cars, they just want to use them through services such as rideshare. Moreover, technology is omnipresent now and as AI becomes more intelligent, it is pairing up with other services to cause major changes in current industries. Innovation lead by design can help us prepare for changing trends and make businesses more sustainable.

What is design and what can we do with it?

Justin argues that companies need to be able to shift their business models from a product focus to focus on providing services that cater to the needs of the customers. Some questions need to be asked here - Where is value created? How can we find new value? And how might we solve big problems with design and business models? We can use Business Model Canvases (BMCs) to answer these questions.

Some interesting shifts that Justin mentions are-

From products to services: For instance, Philips Signify offers lighting as a service. This you just pay utility and they maintain lighting for you. While this does not change costs for the consumer, it helps Philips save money while also making more money than selling just light bulbs.

From singular to circular: One example that Justin uses here is of MUD jeans, that offer jeans as a service. Customers can buy or rent jeans and return them after they’re done. MUD reconditions these jeans and sells them again, which shows a sustainable and circular model.

“We must design ways to move toward getting the job done by selling the use of a product.”

Justin suggests that we must move away from a product focus to job-centric services. BMCs are a point in time. When paired with design, they can be plotted on a z-axis for various points in time, where discovering new problems or opportunities can help change several aspects of the business model accordingly.

How might we create future-proof businesses using design?

Large businesses focus more on execution whereas startups focus on searching for problems to solve. Employing design thinking can help businesses search as well as execute. Justin’s company created a Total Innovation System, which ensures that companies can use the design model of understanding, ideation, prototyping, and validation to have the right strategic conversations, which in turn help in continually producing new value. If we use design in all spheres that run a business- the core strategy and ambition, capabilities and mindsets, organization, resources and funding, metrics, process and tools- we can successfully future proof a business.

Written by Swarnakshi Kapil

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